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How to insure your uninsurable client

Every advisor has cases where the need is very clear. The benefit and coverage period is certain. The client has no health issues or special circumstances and all that needs to be done is to run a spreadsheet to show the client a handful of companies and their rates. The client picks one, the app is taken and the underwriting process goes smoothly.

In a perfect world, every case is this simple. In the real world, many clients offer unique challenges where the answer is not that easily identified. In these cases, you need to be creative and think outside the box if you’re going to arrive at a solution that solves the problem and leads to the sale.

Case No. 1: High premium

Consider this example: Your client is somewhere from age 55 to 70, and has been offered a mild rating for a term life policy you applied for. The premium is much higher than you or the client expected. What do you do to salvage the sale? One solution might be to consider a permanent plan with a carrier that offers table shaving. Yes, the term rates could be a little higher, but you could save time and energy by not needing to take the business to another carrier. Alternatively, if the term need is long enough, a standard rate on a GUL or even a current assumption UL plan could offer a lower premium outlay, as well as a longer protection period. Some carriers even offer rolling targets that generally aren’t met by the first year premium when the UL plan is being designed to look like a level term plan.

If the sale has to be made as a term policy, consider a company that would offer a reduction of a table or two based solely on the client’s lifestyle, regardless of the medical reason for the table rating.

Case No. 2: High risk

Here’s another example: Your client is a private pilot, and, based on her aviation activity, she could face a flat extra premium of $5 per thousand or more. You could consider an aviation exclusion, but, in many cases, the client doesn’t want to be exposed for this risk. An alternative would be to supplement the life sale with an accidental death policy that would cover an aviation event. Generally, these can be purchased for just a couple of dollars per thousand — much less then what most aviation flat extras would cost. With some companies, the base underwriting class can be improved when an aviation exclusion is added, so the client will get a better base rating and be covered for the avocation at an overall lower cost than paying the flat extra premium. In the event the client dies from an accidental death other than private aviation, both polices would pay off.

Case No. 3: Chronic illness

Many clients struggle with trying to insure their children when they have chronic illnesses. Insurers do not like to cover them until they reach their late teens or early twenties, if they are even insurable then. Consider insuring a parent and adding on a child rider that is not underwritten. When the child reaches the end of the rider period, they can convert the benefit for a multiple of the rider amount at standard rates. The caregiver should always have coverage so that the client will have resources to care for the child should a premature death occur.

More solutions

Do you have clients that want to buy more life coverage but would only do so if they didn’t have to take a new medical exam or do a blood test? Maybe a client has recently let a policy lapse and now wants to reinstate the coverage but doesn’t want to come up with many months of back premiums. If they have existing coverage that is five years old or less, there’s a possible solution that can provide them new coverage at the same class, even the best class, on a nonmedical basis. For an individual with a lapsed policy, it could be the solution for obtaining coverage without paying several months of back premiums and going through the medical hurdles required to reinstate the policy.

Clients appreciate the flexibility of buying life insurance with a long-term care rider rather than buying two separate policies to cover these needs. Even better is a plan that offers the opportunity to obtain a 100 percent return of the premiums paid in later policy years.

Need a nonsmoker rate now for a client who just recently quit smoking? How about a table shave product for an 85 year-old? Do you have a client who wants to have the death benefit paid out as an income stream to multiple beneficiaries with different payment periods?

As you can see, there’s a solution for each of these scenarios — they simply require outside-the-box thinking. A good advisor peeks under all the rocks to come up with the right solution for the client. It’s most satisfying when an advisor finds the one right product and company that accomplishes this objective. The client wins and the advisor has a sale.

See also:

Winning the underinsurance battle

Should you be selling final expense insurance?

5 ways you may be failing your clients

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